Liabilities to be absorbed by merged entity: ZEE to NCLTmerged

The scheme of merger between Zee Entertainment Enterprises (ZEE) and Culver Max Entertainment (Sony) provides that the liabilities of the former will be absorbed by the merged entity, the company clarified before the National Company Law Tribunal (NCLT). On Thursday, senior advocate Janak Dwarkadas, appearing for ZEE, argued that no parties will be prejudiced due to approval of the scheme of merger.

“Let me assume that they (object entities) have a claim against Zee. But, the scheme categorically provides that whatever liability of Zee or the transferor company is, will continue and the merged entity will be liable for it,” said Dwarkadas [3:01 pm, 15/01/2023] Adv Pranshi Agarwal: Zee currently is a ₹10,000 crore net worth entity and with this merger, will become a ₹40,000 crore net worth entity. The merger has been blessed by over 99.97% of shareholders and each and every secured creditor,” he added. Currently, ZEE has sought approval from NCLT for merging with Sony, where four lenders such as Axis Finance, IDBI Bank, and IndusInd bank are opposing as debtors of the company, while Indian Performing Right Society Ltd (IPRS) is opposing as operational creditor and claimant of the company.

Senior Advocate Navroz Seervai and Nitesh Jain, partner at Trilegal, also appearing for Zee Entertainment argued that all these claims are currently under dispute and none-of them are secure creditors of the company. The Securities and Exchange Board of India (Sebi), the Competition Commission of India (CCI), the stock exchanges and the Regional Director (RD) of the Ministry of Corporate Affairs have approved the scheme.

“If this was a fraudulent or malafide scheme, would secured creditors or shareholders have approved it?,” questioned Dwarkadas, while opposing the objectors of the scheme matter. After hearing the arguments, the division bench of the Mumbai bench of the National Company Law Tribunal (NCLT), presided by members HV Subba Rao and Madhu Sinha, adjourned the matter for further hearing to February 2, 2023. The merger deal between Sony and Zee has been approved by the Competition Commission of India (CCI) besides the latter’s shareholders, and stock exchanges. The Sony-Zee merger will create a media behemoth that will have a strong presence across TV, digital, and film segments.